02316cam a22002777 4500001000600000003000500006005001700011008004100028100001900069245014700088260006600235490004100301500001900342520100800361530006101369538007201430538003601502690007901538690018501617700002101802700002401823710004201847830007601889856003701965856003602002w3942NBER20150802211127.0150802s1991 mau||||fs|||| 000 0 eng d1 aAsquith, Paul.10aAnatomy of Financial Distressh[electronic resource]:bAn Examination of Junk-Bond Issuers /cPaul Asquith, Robert Gertner, David Scharfstein. aCambridge, Mass.bNational Bureau of Economic Researchc1991.1 aNBER working paper seriesvno. w3942 aDecember 1991.3 aThis paper examines the events following the onset of financial distress for 102 public junk bond issuers. We find that out-of-court debt relief mainly comes from junk bond - holders; banks almost never forgive principal, though they do defer payments and waive debt covenants. Asset sales are an important means of avoiding Chapter 11 reorganization; however, they may be limited by industry factors. If a company simply restructures its bank debt, but either does not restructure its public debt or does not sell major assets or merge, the company goes bankrupt. The structure of a company's liabilities affects the likelihood that it goes bankrupt; companies whose bank and private debt are secured as well as companies with complex public debt structures are more prone to go bankrupt. Finally, there is no evidence that more profitable distressed companies are more successful in dealing with financial distress; they are not less likely to go bankrupt, sell assets, or reduce capital expenditures. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aG33 - Bankruptcy • Liquidation2Journal of Economic Literature class. 7aG32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill2Journal of Economic Literature class.1 aGertner, Robert.1 aScharfstein, David.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w3942.4 uhttp://www.nber.org/papers/w394241uhttp://dx.doi.org/10.3386/w3942